2016 (12) TMI 1166 - AT - Central Excise

SSI Exemption - Benefit of value based exemption Notification No.9/2003-CE dated 01.03.2003 - whether the notification has retrospective effect or prospective effect? - Held that - An amendment was carried out in Notification No.9/2003-CE; by Notification No.67/2003-CE dated 11.08.2003 by which clause (e) was added to Notification No.8/2003-CE and 9/2003-CE, both dated 01.03.2003, according to which clearances effected under Notification No.214/86-CE dated 25.03.1986, 83/94-CE and 84/94-CE were not required to be added to the value of clearances - As per the observations made by Apex Court in para-11 of the case law Kartar Rolling Mills vs. CCE, New Delhi 2006 (3) TMI 63 - SUPREME COURT OF INDIA the benefit of an exemption notification cannot be extended retrospectively - Notification 67/2003-CE was issued on 11.08.2003 and cannot be held to be effective from 01.04.2003. Time bar - Held that - first appellate authority has given elaborate findings as to how demand is not time barred which is acceptable. However, since the issue was relating to complex interpretation of exemption/amending notifications we are of the considered opinion that penalty against the appellant is not sustainable and is set aside. Appellant has also raised the issue that even if the value of clearances of both their units are added to the value of clearances still their total value of clearances will be less than ₹ 3.00 Crore. It is also argued that this issue was raised before the first appellate authority but the same has not been commented upon by the first appellate authority - In the interest of justice this argument of the appellant that their value of clearances in the entire financial year 2003-04 has not exceeded ₹ 3.00 Crore even if goods exempted during the period 11.04.2003 to 10.08.2003 are included in the value of clearances, needs examination. The matter is remanded to the Adjudicating authority only for the limited purpose to examine the issue contained in this paragraph. Appeal allowed by way of remand.

Summary

Issues:
Appeal against rejection of value based exemption, retrospective effect of amendment, time-barred demand, penalty imposition, calculation of total value of clearances.

Analysis:
The appellant challenged the denial of value-based exemption under Notification No.9/2003-CE due to an amendment by Notification No.67/2003-CE. The appellant argued that the amendment should be effective from 01.04.2003, but the authorities disagreed. The Tribunal cited the case law Kartar Rolling Mills v. CCE, emphasizing that exemptions cannot be extended retrospectively. The appeal for retrospective application of Notification No.67/2003-CE was rejected.

Regarding the time-barred nature of the demand, the Tribunal acknowledged the detailed findings of the first appellate authority but found the penalty unjustified due to the complex interpretation of exemption notifications. Thus, the penalty against the appellant was set aside.

The appellant contended that even after adding the value of clearances from both units, the total value remained below ?3.00 Crore. This argument was not addressed by the lower authorities. The Tribunal remanded the issue to the Adjudicating authority for examination. The appellant was instructed to demonstrate that the total value of clearances, including exempted goods, did not exceed ?3.00 Crore during 2003-04, to avoid paying any differential duty.

Ultimately, the appeal was allowed only in part, with a remand to the Adjudicating authority for further examination as per the directions provided. The judgment was pronounced in open court on 31.08.2016.